France's public debt has climbed to an unprecedented 3,595.5 billion euros, the national statistics agency Insee reported on Tuesday. Measured against the size of the economy, the debt ratio now stands at 119% of gross domestic product (GDP) — a level not seen since the aftermath of the Second World War, when the country was rebuilding from near-total destruction.
The second quarter of 2026 saw the debt increase by 59.6 billion euros, following a 75.8 billion rise in the first three months of the year. Central government and social security borrowing drove the increase, while local authorities managed to trim their own debt.
The government has already warned that the debt-to-GDP ratio could reach 121.7% by 2027 — more than double the 60% ceiling set by European Union rules. That would mark a record since Insee began tracking the figure in 1978.
Interest payments become a budget strain
The era of cheap borrowing is a distant memory. During the pandemic years of 2020 and 2021, France could borrow at negative real interest rates, making debt seem almost costless. But with the debt pile now swollen and market rates elevated, the cost of servicing that debt has become a major fiscal headache.
Investors currently demand yields close to 5% on ten-year French government bonds — a level last seen during the 2008 global financial crisis. As a result, interest payments on the public debt are projected to reach around 79 billion euros in 2026, and the government expects that figure to rise to 91 billion euros in 2027.
This growing burden is one of the main reasons behind the deterioration in France's public finances. It also complicates the drafting of the 2027 budget bill, which is due to be presented on 1 October. The government of Prime Minister Sébastien Lecornu aims to bring the public deficit down to 5% of GDP — a target that has already been pushed back by a year.
Yet many economists doubt even that modest goal will be met. With a presidential election looming, structural reforms are politically difficult to push through. As one analyst put it, the electoral calendar freezes any possibility of meaningful consolidation.
If interest rates continue to climb, the budget bill that MPs will soon debate may have limited real significance. The rising cost of debt could quickly overwhelm any planned spending cuts or revenue measures.
The situation is being watched closely across Europe, as France's fiscal troubles could have spillover effects on the eurozone. The record El Niño and other global pressures are already testing the continent's economic resilience.
For now, France's debt trajectory remains firmly upward, and the political calendar offers little room for manoeuvre. The coming months will show whether the government can convince markets — and voters — that it has a credible plan to stabilise the public finances.
